Chapter 11 bankruptcy, often called “reorganization” bankruptcy, is used by businesses and individuals whose debt level may be too high to qualify for the reorganization benefits of Chapter 13 bankruptcy. It’s more complex, however, because of the structuring of repayment. This type of bankruptcy allows a business to keep operating while being given time to repay debts and establish financial stability.
The process begins with a company filing a petition with the bankruptcy court. The company is then given a time frame to present a reorganization and payment plan and if there’s just cause, the court can extend the time to present a plan up to eighteen months. The plan places priority on repayment for creditors based on debt class.
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